Mr LJ Mahlangu - Municipal Demarcation Board

An item of property, plant and equipment is derecognised
when the asset is disposed or when there
are no economic benefits or service potential from
the use of the asset.
The gain or loss arising from derecognition of an
item of property, plant and equipment is included
in surplus or deficit when the item is derecognised.
The gain or loss arising from the derecognition of an
items of property, plant and equipment is determined
as the difference between the net disposal proceeds,
if any, and the carrying amount of the item.
H. PRIOR YEAR ERRORS
The Board shall correct material prior year errors
retrospectively in the first set of financial statements
authorised for issue after their discovery by:
i) Restating the comparative amounts for the
prior year(s) presented in which the error occurred;
or
ii) If the error occurred before the earliest prior
year presented, restating the opening balances
of assets, liabilities and accumulated
surplus for the prior year presented.
I. INVENTORIES
Inventories are assets held in the form of materials
or supplies to be consumed in the production process
or in the rendering of services. Inventories are
recognised as an asset when it is probable that
future economic benefits or service potential associated
with the item will flow to the Board, and
when the cost of the inventories can be measured
reliably. Where inventory is acquired at no cost, or
for nominal consideration, their cost shall be their
fair value as at the date of acquisition.
The cost of inventories shall comprise all costs of
purchase, costs of conversion and other costs incurred
in bringing the inventories to their present
location and condition. Inventories are valued at
the lower of cost and current replacement cost
where it is held for distribution at no charge or
nominal charge, or consumption in the production
55 MUNICIPAL DEMARCATION BOARD - Annual Report 2012
process of goods to be distributed at no charge
or for a nominal charge. The cost of inventories
shall be assigned by using weighted average cost
formula.
J. INTANGIBLE ASSETS
An asset is identified as an intangible asset when it:
(i) is capable of being separated or divided from
an entity and sold, transferred, licensed, rented
or exchanged, either individually or together
with a related contract, assets or liability; or
(ii) arises from contractual rights or other legal
rights, regardless whether those rights are
transferable or separate from the Institution or
from other rights and obligation.
Initial Recognition
Intangible assets are recognised when it is probable
that expected future economic benefits or
service potential attributable to the asset will flow
to the Board and when the cost or fair value of the
asset can be measured reliably.
Subsequent Measurement
Intangible assets are initially recognised as assets
on acquisition date and are initially recorded at
cost. Where an asset is acquired at no cost, or for
a nominal cost, its cost is measured at it fair value
as at the date of acquisition.
Amortisation
Intangible assets are amortised on a straight-line
basis over their useful lives. After initial recognition,
intangible assets are carried at cost less
accumulated amortisation and accumulated impairment
losses. The amortisation period, amortisation
method and residual value is reviewed at
each financial year end. The residual value of intangible
assets is assumed to be zero.
Computer software is stated at amortised cost and
is amortised on a straight-line method over the estimated
useful life of three (3) years.